During the past five years, the number of US. citizens who own foreign securities has increased by thirty percent. This trend has led to the need for a uniform accounting system that would increase the comparability and consistency of financial statements across countries in the world Today, over I 00 countries have adopted International Financial Reporting Standards (!FRS) as their primary acc...

We provide a simple comparative test of contracting and value relevance theories of accounting, using data on the importance of countries’ debt and equity markets. Contracting (debt markets) theory predicts conditional conservatism, in the Basu (1997) sense of asymmetrically timelier loss recognition than gain recognition, as proxied by a stronger relation between earnings and negative returns....

Theory predicts that the accounting information transparency affects credit spreads. Given that one of the putative benefits of International Financial Reporting Standards (IFRS) is transparency of accounting information, this study evaluates the impact of IFRS on the pricing of credit spreads in the over-the-counter Credit Default Swap (CDS) market. Using a difference in differences methodolog...

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We examine whether Basu’s (1997) differential timeliness metric and the related C-Score metric are effective in detecting predictable differences in conservatism surrounding corrections of overstated earnings. Cross-sectional and time-series analyses, employing 2132 firms making restatements during 1999–2005, suggest Basubased metrics capture variation in conservatism. Further, we find that inc...

We examine the tradeoff between having affiliated bankers on board and conservative accounting for mitigating debtholder-shareholder conflicts. We argue that affiliated bankers on board provide lenders with private information and control rights, thereby lowering debtcontracting demand for conservatism in public financial reports. We find that firms with affiliated bankers on board have lower c...

the present study is intended to examine the effect of accounting conservatism on firms’ non-profitability in tehran stock exchange in 48 unprofitable firms and 57 profitable firms over a period of seven years from 2001 to 2007. this study was conducted according to givoly and hayn model to measure accounting conservatism index in non-profitable and profitable) firms. data analysis performed wi...